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Is a wealth tax a good idea?

SonOfDaedalus said:
Is a wealth tax a good idea?
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Yes and no.
Administration 101: "Incentivize what you want more of and de-incentivize what you want less of".

As a revenue generating method, a general wealth tax ispretty much unworkable.
Not everything can be taxed, so what you will mainly be doing is motivating people to channel wealth into those items. With administration and the closing of loopholes, this method will probably be less efficient than many alternatives.

However, as motivators, taxes work just fine.
One form of wealth tax could be to on accumulated cash in bank accounts, to motivate your population to invest (if mountains of paper money was becoming a problem for your currency).
You can institute taxes on water, electricity, and gasoline to motivate people to use less of those things. Obviously you then you have to be careful not to tax the work force out of work mobility, or out of their homes.

The results are predictable enough that your average national economist can figure them out, and thus very safe to use as long as you have administrations that care more about results than showing off.
The advantages are two-fold. You get people to do what you want, and you can use the extra income to supplement your normal revenue generation; lowering other taxes or making long-term investments as necessary.
The only obstacle is that in democracies we don't really have a motivator for politicians to do their jobs and follow these simple rules, besides reelection. But that is another discussion.
 
Slavister said:
"Penalizing" is very applicable in this case actually. Tax on wealth is very progressive (no pun intended). And while I don't mind progressive tax system in general (we have one today), this would be too much in my opinion.
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So the taxes paid by the rich being slashed for decades, so that 95-100% of all economic growth goes to the top 1%, resulting in record inquality, that's great you think, but reversing some of the changes to make it more fair, that's "too much". You and I are political enemies. You support plutocracy and an end to democracy whether you understand it or not.

I am in fact arguing for what the right policy is.
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And you used the propaganda phrase about taxes (on the rich only) being 'penalties'.
 
Individual said:
Stop taxing income and only tax disposable income as it is put to use, IMO, is an excellent idea, and the ultimate solution to permanently resolving our economic woes.
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No, that's insane, regressive, and economic tyranny. most people spend a hugely higher percent of their income on consumption than the rich. That's why the armies who serve the rich are fighting for what you want.
 
Craig234 said:
And yet many countries have it.
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Most abandoned it.

I would like to see more ideas on how it can be achieved. Until then I support the idea, but not the implementation.
 
Craig234 said:
So the taxes paid by the rich being slashed for decades, so that 95-100% of all economic growth goes to the top 1%, resulting in record inquality, that's great you think, but reversing some of the changes to make it more fair, that's "too much".
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You are way off. Where did I say something against reversing some of the changes? I am happy to reverse Trump tax cuts. I am happy to raise taxes on income even further (e.g. to help cover Universal healthcare). What I am against is coming up with completely NEW kind of taxation that is way more progressive than "reversing some of the changes".

Craig234 said:
You and I are political enemies.
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We are? I did not know that since I am quite on the left. But fine, if you say so...

Craig234 said:
You support plutocracy and an end to democracy whether you understand it or not.
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Look who is using propaganda and slogans now.

Craig234 said:
And you used the propaganda phrase about taxes (on the rich only) being 'penalties'.
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Meh - that word sets you off like that? Do you know anything about investing? Any kind of "safe" investments like muni bonds would make less than 2% and UNDERPERFORM the inflation as it is (i.e. you'd still be really losing money). Yet under these proposals, you'd give up more than that interest and even lose part principal. That means that government forces you to either lose principal (not just in terms of inflation but even in nominal terms) or risk even more of it.

So yes, I will stand by term "penalty" even if some right-wingers use it in similar context for regular income taxes.
 
SonOfDaedalus said:
But if the wealth tax is small, why would I move my wealth out of a stock market that's giving me good returns?
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You’re misinterpreting my post. I’m not saying one would move his/her wealth out of the stock market. I’m saying a significant portion of wealth already exists outside the stock market, in assets that do not have a readily determinable fair market value.

I mean if you really want to drill it down to a “common man” type parallel - if I were to estimate my own “wealth”, sure I could check my bank balance and easily pull up my portfolio. But what is the value of my home (do I need to pay an appraiser each year to appraise it?). What is the value of my vehicles? What is the value of my camper and/or boat? What is the value of all my “stuff”? What is the value of my accounting/medical/law/IT (fill in any other small business) practice?

Now, take that x multiple 0’s for the wealthiest, and you can see the issue
 
Juggernaut74 said:
You’re misinterpreting my post. I’m not saying one would move his/her wealth out of the stock market. I’m saying a significant portion of wealth already exists outside the stock market, in assets that do not have a readily determinable fair market value.

I mean if you really want to drill it down to a “common man” type parallel - if I were to estimate my own “wealth”, sure I could check my bank balance and easily pull up my portfolio. But what is the value of my home (do I need to pay an appraiser each year to appraise it?). What is the value of my vehicles? What is the value of my camper and/or boat? What is the value of all my “stuff”? What is the value of my accounting/medical/law/IT (fill in any other small business) practice?

Now, take that x multiple 0’s for the wealthiest, and you can see the issue
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But homes are already taxed through property taxes. That's already a wealth tax. Maybe the appraised value is not accurate but it's not that far off either.

If you're really wealthy you want most of your wealth in investment and businesses generating more income. Let's say I own some apartment buildings. They generate revenue through rents. The value of those buildings is part of my networth but how do you tax that?

So, I think the problem really is that wealthy people have their wealth tied up in revenue-producing businesses. As long as they don't sell, it won't be taxed. It's not liquid.

But I don't think the value of homes, cars, art, etc are a large portion of their wealth.
 
I agree with your last line...I was just using those things to illustrate the point.

And there’s absolutely a ton of wealth in revenue generating businesses. For many Uber-wealthy folks, it’s the bulk of their wealth.

A significant part of my accounting practice is providing business valuation services. I see this every day.

Naturally, the devil is in the details. Sure you could just craft the tax to apply to liquid assets. But that would cause an immediate crash and probably a run on a few banks as people started moving their wealth out of liquid assets. The wealth taxes that have been proposed thus far however, would apply to ALL wealth - including difficult to value, illiquid assets. It is for that reason that I primarily oppose such a tax.

Someone a few posts ago mentioned the estate tax - which is essentially a wealth tax, but is only levied once (upon death). I agree with that poster, that if we’re going down this road, I would much rather we do it via an increased estate tax, where all of this administration is done once, vs. an annually levied wealth tax.
 
I like the property tax analogy.
The wealth tax will first hit multi millionaires
Then it will hit millionaires
You children and grandchildren will be paying wealth tax on ther homes and cars

And the government will still not have enough money
 
Slavister said:
You are way off. Where did I say something against reversing some of the changes? I am happy to reverse Trump tax cuts. I am happy to raise taxes on income even further (e.g. to help cover Universal healthcare). What I am against is coming up with completely NEW kind of taxation that is way more progressive than "reversing some of the changes".
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How about Bush tax cuts? Reagan tax cuts? Will you reverse enough to return to not only when things were more fair, but to undo the massive shifts of wealth that have happened for decades? If so, I'll withdraw my comment; if not, it stands. You're more concerned with whether it's 'NEW' than the effect.

Look who is using propaganda and slogans now.
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There was no propaganda or slogan.

Meh - that word sets you off like that? Do you know anything about investing? Any kind of "safe" investments like muni bonds would make less than 2% and UNDERPERFORM the inflation as it is (i.e. you'd still be really losing money). Yet under these proposals, you'd give up more than that interest and even lose part principal. That means that government forces you to either lose principal (not just in terms of inflation but even in nominal terms) or risk even more of it.

So yes, I will stand by term "penalty" even if some right-wingers use it in similar context for regular income taxes.
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What a bizarre shoehorning of the topic into something about muni bonds.

It's a far simpler topic. The rich paying enough taxes to support the country's needs and to have economic justice is not a "penalty" on them. If you want to call taxes paying a penalty, then get rid of democracy and taxes. Just have a dictator and slaves, who pay no taxes, so they're free and not penalized.
 
Snoopysvet said:
I like the property tax analogy.
The wealth tax will first hit multi millionaires
Then it will hit millionaires
You children and grandchildren will be paying wealth tax on ther homes and cars

And the government will still not have enough money
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Idiotic, and false. You're losing a lot of money NOW because they rich have shifted their taxes onto you and the debt.
 
SonOfDaedalus said:
But homes are already taxed through property taxes. That's already a wealth tax.
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It's not. First, it's regressive - poorer people have a LOT more of their wealth in their homes than the rich. Second, almost everyone lives in a home, and renters pay property taxes in higher rent.
 
Juggernaut74 said:
Someone a few posts ago mentioned the estate tax - which is essentially a wealth tax, but is only levied once (upon death). I agree with that poster, that if we’re going down this road, I would much rather we do it via an increased estate tax, where all of this administration is done once, vs. an annually levied wealth tax.
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Yet Republicans are always fighting hard to eliminate the estate tax entirely, and have perpetual dynasties.
 
You get less of whatever you tax. Overzealously tax wealth and you'll get less wealth creation.
 
SonOfDaedalus said:
It sounds like a good idea on paper. If you could tax a tiny portion of wealth, you would generate massive amounts of revenue. But of the 15 Europen countries who tried this recently only 4 still have it.

It seems that the rich are really good at avoiding these taxes. They shift their assets to asset classes that are not affected by this tax. Some leave the country. So, overall the tax costs more than it collects.

What do you think?

Democrats Love a Wealth Tax, But Europeans Are Ditching the Idea
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Why do you think the 11 countries bailed on the idea, having tried it?
 
ocean515 said:
Why do you think the 11 countries bailed on the idea, having tried it?
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That doesn't matter. The socialist model fails over and over and over again yet what are they pushing? You got it.
 
SonOfDaedalus said:
It sounds like a good idea on paper. If you could tax a tiny portion of wealth, you would generate massive amounts of revenue. But of the 15 Europen countries who tried this recently only 4 still have it.

It seems that the rich are really good at avoiding these taxes. They shift their assets to asset classes that are not affected by this tax. Some leave the country. So, overall the tax costs more than it collects.

What do you think?

Democrats Love a Wealth Tax, But Europeans Are Ditching the Idea
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My view of a wealth tax is that it is just a new shiny object to wave in front of the great unwashed. If congress truly wanted to attack dynastic wealth and make the FIT more progressive they could more easily fix our current tax system. I am not a tax accountant but some examples of things that could be changed:

- Undue the carried interest rule that gives special benefits to private equity.
- Change the step-up basis rule on gift and estate taxes.
- Change capital gains differential for super high income individuals.

I am sure others can add to the this. No need for a new,hard to administer tax law IMO.
 
ocean515 said:
Why do you think the 11 countries bailed on the idea, having tried it?
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From the article, it seems it didn't bring in the revenue that they projected and due to tax avoidance and administrative costs, they actually lost revenue. So, I'd like to know why Warren thinks her plan will not run into the same problems.

I haven't made up my mind on the issue. I do believe that a growing wealth inequality is not healthy because it leads to a power inequality. It's not good for the wealthy either because it eventually leads to a backlash.
 
Craig234 said:
Yet Republicans are always fighting hard to eliminate the estate tax entirely, and have perpetual dynasties.
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I think the estate tax should probably be increased. Especially for very large estates.
 
maquiscat said:
I seem to recall that when income tax started it was only on the wealthy. That didn't last long. So why would anyone hold a delusion that this wealth tax wouldn't work it's way down just as the income tax did?

Sent from my Z982 using Tapatalk
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Agree. Pretty soon retirees with $100k in the bank would be paying a wealth tax on it every year.
 
SonOfDaedalus said:
From the article, it seems it didn't bring in the revenue that they projected and due to tax avoidance and administrative costs, they actually lost revenue. So, I'd like to know why Warren thinks her plan will not run into the same problems.

I haven't made up my mind on the issue. I do believe that a growing wealth inequality is not healthy because it leads to a power inequality. It's not good for the wealthy either because it eventually leads to a backlash.
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Taxing wealth will fail at all times. We don't tax wealth, we tax income.

If 500 acres of land is sitting there empty, but worth $5 million, why should it be taxed?

Taxing wealth is just a neat sounding idea for people trained to believe being wealthy is bad.
 
SonOfDaedalus said:
It sounds like a good idea on paper. If you could tax a tiny portion of wealth, you would generate massive amounts of revenue. But of the 15 Europen countries who tried this recently only 4 still have it.

It seems that the rich are really good at avoiding these taxes. They shift their assets to asset classes that are not affected by this tax. Some leave the country. So, overall the tax costs more than it collects.

What do you think?

Democrats Love a Wealth Tax, But Europeans Are Ditching the Idea
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I agree, it sounds like a good idea. But we see corporations moving their headquarters overseas to avoid the higher corporate tax here in the U.S. Throughout the years we, down south had many businesses move down here for the much lower taxes and regulations of the north. Moving is a way of voting and avoiding.

It might work if it was kept reasonable and not too high. Then again keeping it low might not generate the expected revenue envisioned. It might not be worth all the trouble. Too high, shifting funds, assets, overseas and moving is a real possibility.

I'm up in the air on this, I don't know.
 
SonOfDaedalus said:
It sounds like a good idea on paper. If you could tax a tiny portion of wealth, you would generate massive amounts of revenue. But of the 15 Europen countries who tried this recently only 4 still have it.

It seems that the rich are really good at avoiding these taxes. They shift their assets to asset classes that are not affected by this tax. Some leave the country. So, overall the tax costs more than it collects.

What do you think?

Democrats Love a Wealth Tax, But Europeans Are Ditching the Idea
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Why on Earth should someone agree to pay taxes again on income they've already paid taxes on?
As punitive punishment for keeping more of their income and not spending it?
(Yes, the US economy is driven largely by consumer spending, so there would be US economic consequences for this)
How many bites at the apple does the federal government expect to take? Shouldn't one be enough?
 
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